Starbucks picks York for plant

Maryland lost a five-state battle for a key economic-development plum yesterday, as fast-growing Seattle coffee chain Starbucks Corp. said it would open a coffee roasting and distribution plant in York, Pa. The plant could produce 500 jobs.

The decision to move to York came at the end of a nine-month search that eventually narrowed itself to a choice between York and the Riverside Business Park in the Belcamp section of Harford County.

"The reason it was attractive was that, at a minimum, in the first phase they were talking 275 jobs. In the future, with expansion, it was 400 to 500," said Paul Gilbert, Harford County economic development director and former president of BLC Properties, which owns the Belcamp site.

York had been considered the favorite, but negotiations with Pennsylvania and local officials over low-interest state financing had stalled in recent weeks, allowing Maryland to fight its way back into the picture, said Craig Kinzer, a Seattle real estate adviser working for Starbucks.

"This is a difficult one because a lot of energy and creativity went into it," said Mark L. Wasserman, secretary of Maryland's Department of Economic and Employment Development. "But there have been wins before and there are wins coming."

The difference was that in York, Starbucks will be the first tenant in a new industrial park, Mr. Kinzer and Mr. Wasserman said, while they would have had to fit into an existing park in Belcamp.

The York site can be ready faster than the Harford site, Starbucks will have a right of first refusal on all the land it needed for future expansion, and the company can even write the covenants governing the future development for the rest of the park, Mr. Kinzer said.

"Riverside could have been 1 million square feet" of warehouse and factory space, but no more, Mr. Kinzer said. "We had to be prepared for further expansion. We're making a 15- to 20-year commitment."

The original plant will be about 400,000 square feet and will open next summer, Mr. Kinzer said. Anticipated expansion could boost the plant to somewhere between 700,000 and 1 million square feet, he said, which would have made the plant one of the largest industrial/distribution operations in the Baltimore-Washington corridor.

The center is supposed to support Starbucks stores in the mid-Atlantic and New England regions, Mr. Kinzer said. Starbucks spokeswoman Kat Spellman said last month that the 380-store chain has 23 stores in metropolitan Washington (including two stores in the Baltimore area), Massachusetts and New York, as well as a mail-order business.

In June, the company said it would add 200 new stores during fiscal 1995, but the company has not said how many will be in the eastern United States.

Ron Jury, a spokesman for the Pennsylvania Department of Commerce, said he would not comment until Gov. Robert P. Casey makes a formal announcement in York today. "I can't step on any announcement the governor is going to make," he said.

Mr. Wasserman and Mr. Kinzer said that state and local incentives to lure Starbucks were adequate.

"We had a very hefty and creative package," Mr. Wasserman said. "We didn't have a huge pot of funds, so we had to use our wits."

He said the Maryland Port Administration offered to give Starbucks discounts on cargo handling if the company put the plant in Belcamp. He said Harford County offered the company tax abatements and a "fast-track" project approval process that could save the company time and money. The state also offered to guarantee that the company could buy pollution credits in the future, if its expanded operations bumped up against limits imposed by the 1990 amendments to the federal Clean Air Act, Mr. Wasserman said.

Mr. Kinzer said Pennsylvania's financing plan was "very important" but not the central fact driving the decision.

"The tie-breaker was the specific site," Mr. Kinzer said. "We thought Maryland was excellent. . . . It was close in incentives overall."

Mr. Wasserman said Pennsylvania was able to offer an unmatchable financing deal because the money came from a major bond issue the state floated before the 1986 federal tax code revision. The 1986 bill closed a loophole that gave the bonds especially favorable tax status, which allowed Pennsylvania to use the money it had already raised to offer financing more cheaply than Maryland could have matched with bonds issued this year.